HB 229

Under existing law, the State Auditor is responsible for making an annual report to the Governor showing audited receipts and disbursements of government and giving the results of other audits performed by the Office of the State Auditor. Annually, the State Auditor reports in writing all missing items of state property valued at more than $500

Under existing law, the property manager of each agency or department of the state is responsible for preparing an inventory of all property of the agency or department valued at $500 or more

Under existing law, the Inventory Control Division of the Office of the State Auditor conducts an audit of the inventory of each agency or department

Under existing law, the Attorney General may institute an action on behalf of the state to recover the value of any personal property of any agency or department lost to the state due to neglect or willful act of the person having custody of the property

This bill would establish a procedure by which the State Auditor could make a written demand and, when necessary, initiate legal action for the recovery of any amounts of public funds improperly withheld, misappropriated, or otherwise illegally expended and for the recovery of the value of any public property disposed of in an unlawful manner by a public officer or employee of any public body, department, or agency of government

Relating to the State Auditor; to amend Section 36-16-1 of the Code of Alabama 1975, to further provide for the duties of the State Auditor; and to establish a process by which the auditor would make written demand for recovery of public funds improperly withheld or expended and for the value of property disposed of in an unlawful manner and to authorize the State Auditor to initiate legal action to recover such funds or value of property.

Section 1

Section 36-16-1 of the Code of Alabama 1975, is amended to read as follows:

§36-16-1.

The sole powers, functions, and duties of the State Auditor shall be as follows all of the following:

(1) Those enumerated in the constitution;.

(2) The keeping of a seal with the devise, "The State of Alabama, Auditor's Office;"."

(3) If the Treasurer, in the event of his or her resignation or removal, fails to comply with the provisions of this code, or if he or she dies or absconds, the stating of his or her account in the presence of any person attending on the part of such late Treasurer and the delivering of the books, papers, and moneys belonging to the Treasury to his or her successor, taking his or her receipt for the same, and recording and filing such the receipts and statement and reporting the same to the next Legislature;.

(4) The postauditing of the accounts and records of the Department of Finance and the Treasurer;.

(5) The serving on the boards and commissions of which he is by law an ex officio member; and.

(6) Making a written demand or initiating legal action, when necessary, for the recovery of any amounts representing public funds the State Auditor finds to be improperly withheld, misappropriated, or otherwise illegally expended by an officer or employee of a public body, department, or agency of government subject to audit pursuant to this chapter, and for the recovery of the value of any public property disposed of in an unlawful manner by a public officer or employee of any public body, department, or agency of government subject to audit pursuant to this chapter.

(6) (7) The making of a full and complete report to the Governor at the close of each fiscal year showing the audited receipts and disbursements of the government for the last completed fiscal year, as required by the constitution and as shown by the records and documents in the office of the Department of Finance, which records shall be audited by him the State Auditor. The report shall also include the results of his or her audit of all taxes and revenues collected and paid into the Treasury and shall give the results of all other audits made by him the State Auditor. The report shall be printed and bound with, and as a part of, the annual financial report of the state prepared by the Department of Finance. The State Auditor shall make reports oftener upon, and matters pertaining to, his the office if required by the Governor or the Legislature."

Section 2

(a) If the State Auditor determines, as a result of an audit or inventory conducted by his or her office pursuant to Chapter 16 of Title 36 of the Code of Alabama 1975, that any amounts representing public funds are improperly withheld, misappropriated, or otherwise illegally expended by an officer or employee of any public body, department, or agency of government subject to audit pursuant to Chapter 16 of Title 36 or that public property has been disposed of in an unlawful manner by a public officer or employee of any public body, department, or agency of government subject to audit pursuant to Chapter 16 of Title 36, the State Auditor shall make a written demand to the person or persons liable for such amounts and upon the surety on the official bond thereof, and, if applicable, to any individual, partnership, corporation, or association to whom the illegal expenditure was made or with whom the unlawful disposition of public property was made, if such individual, partnership, corporation, or association knew or had reason to know through the exercising of reasonable diligence that the expenditure was illegal or the disposition unlawful. (b) A demand made pursuant to subsection (a) shall be premised on competent evidence, which shall include at least one of the following: (1) A sworn statement or statements. (2) Written documentation. (3) Physical evidence. (4) Reports and findings of government or other law enforcement agencies. (c) A demand letter issued pursuant to this section shall remain confidential until the individual against whom the demand letter is being filed has been served with a copy of the demand letter. If the individual cannot be notified within 15 days using reasonable means and due diligence, the notification shall be made to the individual's bonding company, if he or she is bonded. All moneys recovered shall be paid into the State Treasury, and may be disbursed to the appropriate department or agency in the amount demanded within 30 days from the date thereof, together with interest thereon in the sum of one percent per month from the date the amount or amounts were improperly withheld, misappropriated, or otherwise illegally expended. (d) In the event that the person or persons or the surety refuses, neglects, or otherwise fails to pay the amount demanded and the interest due thereon within the allotted 30 days, the State Auditor may initiate legal action in the Circuit Court of Montgomery County to recover the total due from the person or persons and surety on official bond named therein. When requested by the State Auditor, the Attorney General shall provide assistance in prosecuting the case. The amounts so recovered shall be paid into the State Treasury. In any case where written demand is issued to a surety on the official bond of such person or persons and the surety refuses, neglects, or otherwise fails within 120 days to either pay the amount demanded and the interest due thereon or to give the State Auditor a written response with specific reasons for nonpayment, then the surety shall be subject to a civil penalty in an amount of 12 percent of the bond, not to exceed ten thousand dollars ($10,000), to be deposited into the State General Fund.

Section 3

(a) If any state department or agency refuses or fails to make any inventory or supplemental inventory required by Chapter 16 of Title 36, Code of Alabama 1975, or to do so in the manner prescribed by the State Auditor, the State Auditor shall proceed to make, or cause to be made, the inventory or supplemental inventory; and the expense thereof shall be personally borne by the property manager, and the property manager shall be responsible on his or her official bond for the payment of the expense. (b) In the event that an examination conducted pursuant to Section 36-16-8, Code of Alabama 1975, finds items that are included on the inventory of a department or agency which are missing and otherwise unaccounted for, the State Auditor may proceed under the provisions of Section 2 to recover the value of the missing items. The demand shall be made against the head of the agency, the agency's property manager, and any other appropriate officer or employee, if identified.

Section 4

This act shall become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.